The return on composite investment instruments takes the form of weighted-average, derived from two economic indicators or more. Three experiments illustrate that prospective investors tend to valuate composites “by-tranche”, consistently violating the premise of reduction. Valuation-by-tranche shows for uncertain and risky composites and reflects in allocation problems and binary choice. The willingness to invest still strongly increases when one tranche hedges against the other, suggesting that reduced-form considerations may interfere with the inclination to value by part. A hybrid model where (...) investors weight the values of tranches, but also respond to the reduced-form, approximates the data most accurately. (shrink)